Optical fiber prices fell last year, the demand outlook this year is uncertain

In 2010, the global economy rebounded significantly. The optical fiber market was comprehensively promoted by various factors such as 3G, FTTx, and triple play. Following the peak period of 3G deployment in 2009, it entered a steady state of development.

According to 2010 CRU statistical data and related manufacturer's data analysis, in 2010, China imported about 20 million core kilometers of optical fiber, imported 1,900 tons of preforms, and 1,000 tons of imported fiber cladding sleeves. Excluding 20% ​​of the production volume of preforms and casings, it was converted into 70 million core kilometers of domestic optical fiber production throughout the year. In addition to the number of imported optical fibers, in 2010, the total demand of the domestic optical fiber market reached 90 million core kilometers, the effective supply capacity was 10 million core kilometers, and the utilization rate of the production capacity was about 90%, which was at a relatively high level compared with history.

It is worth noting that, compared with 2009, the average fiber price for centralized procurement by operators fell from a medium level of 80 yuan in 2009 to a medium-low level of 70 yuan in 2009. According to Liu Zhifei, vice president of marketing for Corning Communications Greater China, the reason is that "For the higher market demand brought about by the expansion of 3G equipment in 2009, due to the reduction of communications capital expenditure in 2010 (down 10-20%, Ministry of Industry and Information Technology) This led to a drop in market demand.” Although it is less than the historical high point of demand in 2009, the demand for the domestic optical fiber market in 2010 remains very strong, with a balance between supply and demand.

In the 3G era, deployment of base stations and indoor fiber-optic cable-laying-pulled fiber surged, triggering the expansion of production capacity by related companies in the industry, leading to a saturation of supply and demand in the optical fiber market in 2010. It is expected that manufacturers will slow the pace of expansion in the future.

With the end of 3G construction, it will inevitably weaken the pull of the optical fiber market. At the same time, China’s new wave of broadband speedup will increase the demand for fiber in the market. From January 1, 2011, China Telecom Shanghai Co., Ltd. launched the largest ever urban broadband network speed increase operation "urban optical network". In 2011, the average household bandwidth will increase to 8M. By 2015, full fiber-to-the-home coverage will be implemented in Shanghai, where 100M broadband access capacity will cover more than 90%, and the average bandwidth will be upgraded to 50M by then.

It is precisely because the multi-power forces that drive the development of the optical fiber market are in an uncertain phase of growth and decline, making the trend of the optical fiber market in 2011 appear confusing. "It is too early to predict the demand of China's optical fiber market in 2011." Liu Zhifei analyzed that, in terms of negative factors, the demand for optical fibers driven by 3G construction will be further reduced.

However, in terms of positive factors, it is possible to observe more and more of the access network construction led by China Telecom and China Unicom's fixed network operators and fiber-to-the-home; firstly, it is encouraged by the State Council's introduction of the triple play policy. As a potential fourth national operator, Radio and Television is also vigorously promoting fiber-to-the-home initiatives. At the same time, Corning also heard that some mobile operators such as China Mobile may start testing 4G networks in some cities.

“We believe that the fixed investment scale and investment direction of the telecommunication industry are the two main factors driving the optical fiber market,” said Liu Zhifei. Obviously, the investment focus of communication operators in passive networks in recent years has mainly focused on the level of the access network or the “last mile” network.

According to a report from Pyramid Research, by the end of 2011, China will surpass Japan to become the largest fiber optic market in Asia, operating 25.9 million fiber access lines. Pyramid Research analysts said: "Switching to faster, higher-cost fiber connections will ensure continued growth in fixed service revenue in China."

Technology and cost are the secret of Corning’s long-term position to control the number one supplier of optical fiber. "We believe that technology and cost are important factors in winning the market competition." Liu Zhifei said that similar to other industries, the empirical curve also applies to the optical fiber industry. As the inventor of the first commercially available low-loss optical fiber, Corning has accumulated a large amount of proprietary knowledge in improving production efficiency and quality control, and also has a highly competitive cost advantage.

With the construction of fiber-to-the-home systems, the problem of entering homes becomes more and more obvious. The concentrated performance is due to the difficulty in wiring and the weak anti-bend ability of existing optical fibers. In this situation, there is an urgent need for higher-performance optical fibers to cope with home entry challenges. Corning has not stagnated. Instead, it continues to invest heavily in research and development of new products such as Corning ClearCurve's single-mode and multi-mode flexile fiber product line and Corning SMF-28 ULL, the world's lowest loss land-based fiber. These innovative products conform to the trend of network design development and help customers solve the problems they face. At the same time, they also contribute to the infrastructure of the customers' countries and benefit all ordinary citizens.

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